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About 500 plush dogs and cats are spread out with help from Lackawanna County Sheriff’s Department Cpl. Corey Cavalieri on Thursday at the Aaron Center in Dickson City, with more stuffed animals to be donated in the next few weeks.
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BY CHARLES SCHILLINGER AND DAVID SINGLETON
(STAFF WRITERS)
/
Published: March 28, 2010

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At the heart of the scheme through which federal prosecutors say Lackawanna County Commissioner A.J. Munchak and former Commissioner Robert C. Cordaro were paid nearly half a million dollars in bribes and kickbacks is the widespread practice of awarding lucrative public contracts without competitive bidding.

Non-competitive contracts stoke suspicions about the fairness of public expenditures, and they are in many cases bad deals for taxpayers, watchdog organizations say.

"The history of public finance shows the less competitive bidding there is, the higher the cost is," said Tim Potts, co-founder of the nonpartisan Democracy Rising Pennsylvania. "If you don't have to compete with somebody for a contract, you are not going to give the lowest possible prices."

The investigation that led to the indictments of Mr. Munchak and Mr. Cordaro was rooted in testimony at the trial of Charles "Chuckie" Costanzo, a childhood friend of Mr. Cordaro. His startup company, Executive Claims Administration Inc., was awarded a no-bid contract to administer the county's workers' compensation fund in 2004, shortly after Mr. Munchak and Mr. Cordaro became the majority commissioners.

Mr. Costanzo is now serving a nearly six-year prison sentence after his conviction last year for stealing almost $650,000 from the fund. According to federal investigators, he allegedly paid thousands of dollars in cash to Mr. Cordaro.

Pennsylvania law allows local governments to award no-bid contracts or to make no-bid purchases - some of which can involve hundreds of thousands if not millions of dollars - under a number of circumstances.

Most of those fall within the category of professional services, a broad exemption that includes the services of lawyers, doctors, engineers, architects, real estate appraisers and fine arts practitioners but can also encompass any service that requires professional or special expertise.

Mr. Cordaro and Mr. Munchak were often criticized for awarding no-bid, professional services contracts to friends, including:

- Glen Gress, a big political contributor to Mr. Cordaro and Mr. Munchak, received the concessionaire contracts at the baseball stadium and the former Montage Mountain ski resort without any bidding process.

- New Hope Healthcare Inc., owned by Ron Halko, a friend of Mr. Munchak, received $15,000 a month under a three-year contract in 2005 to help run the former Lackawanna County Health Care Center.

- Dr. Edward Zaloga, another friend of Mr. Munchak, was hired in 2004 to provide medical services to county prison inmates with a five-year, $8.6 million contract. While two proposals were submitted, chief financial officer Tom Durkin does not recall a request for proposals process.

And while the Cordaro/Munchak administration handed out its share of non-competitive contracts, the practice is hardly limited to county government:

- The Scranton School District hired a design team in 2006 to oversee construction of a new school, along with improvements to several others, and paid it $2 million without any bidding or even a contract. The design team was made up of Highland Associates, the Palumbo Group, Acker Associates and the Quandel Group.

- The city of Scranton awarded design work for the city police headquarters to MOS Design Inc. and for the Department of Public Works headquarters to Highland Associates without a competitive process. The former received an initial payment of $35,000, while Highland received $107,800.

While non-competitive contracts for professional services are permitted, nothing bars a local government from undertaking a competitive process, such as a request for proposals or a request for qualifications, to acquire those services.

The Governor's Center for Local Government Services, in its purchasing handbook for local government officials, suggests caution in claiming a professional services exemption.

The center, which is part of the state Department of Community and Economic Development, advises using competitive purchasing as much as possible, even when it not mandated.

"Competitive bidding requirements are a public policy established to prevent fraud and favoritism and to protect public funds," the handbook states.

Mr. Potts of Democracy Rising said the only way for local governments to avoid questions is to adopt a policy that contracts across the board will be subject to competition.

Competition is not only crucial to maintaining the public's trust and confidence in government, he said, it makes sense financially, especially at a time when local governments have no money to waste.

"From our perspective, there should be no no-bid contracts," he said.

Democracy Rising also advocates at least a one-month waiting period for the awarding of all contracts, including those for professional services. There is very little local governments do that has to be done within a month, Mr. Potts said.

"If in fact there is only one provider interested in or able to do the work, you have lost nothing," he said. "If there is more than one, you potentially get a better price."

Even contracts awarded for emergency situations should be subject to some sort of competition, he said. Although emergencies by definition are unexpected, pre-planning can ensure there are policies in place that spell out how proposals will be sought and the work awarded.

"The last thing people need in an emergency is to think it's a fast-track method to rip off the government," Mr. Potts said.

Barry Kauffman, executive director of Common Cause Pennsylvania, said his organization has always encouraged "to the greatest degree possible" that contracts be bid, including those for professional services.

When public officials award non-competitive work to friends, associates or campaign contributors, it raises the specter of a quid pro quo, even if the recipients ultimately are the most qualified or offer best prices, he said.

"You have to wonder if the taxpayers are getting the best bang for their bucks or is this just a reward for a campaign contribution," Mr. Kauffman said.

Contracts that are publicly bid can be an issue if they skirt the spirit of competitive bidding requirements. Mr. Kauffman said Common Cause has seen local governments award contracts in which the specifications are so narrowly constructed that there "can only be one qualified bidder," he said.

"That bothers us as well," Mr. Kauffman said.

Scranton Mayor Chris Doherty said he agrees going forward that any no-bid contract is going to give the appearance of impropriety.

"In light of all of this (the federal indictment of Mr. Cordaro and Mr. Munchak), everything should be bid out," he said. "With professional services, obviously you have to take into consideration the talent of people ... but I think you just make it policy."

County Commissioner Corey O'Brien pointed to his and fellow majority Commissioner Mike Washo's efforts to make the process more transparent by making contracts available online and using a competitive procedure, either bidding or requests for proposals or qualifications.

He indicated the county could make its purchasing policies even more strict.

"We're going to look at all that, especially in light of developments here," Mr. O'Brien said.

In 2007, amid questions about the costs associated with the school district's $56.2 million construction project, School Director Kathleen McGuigan announced she was returning a $500 campaign contribution from Don Kalina of design team member Highland Associates. At the time, she said the unsolicited campaign donation seemed "like pay to play."

She still feels that way.

"I didn't want anyone to think I would have voted a certain way based on a donation to my campaign," Mrs. McGuigan said. "As elected officials, we should always be above the appearance of impropriety."

Mrs. McGuigan said she favors requiring a competitive process for all school district contracts, including those for professional services, although she acknowledged that places her in a minority on the board.

Her position goes beyond appearances and beyond transparency, she said. The inherent problem in awarding non-competitive contracts should be obvious to anyone "with a little common sense."

"Competition always breeds the best price. Put an RFP out there and see what comes back," she said. "There is nothing to be lost by putting it out there. There is everything to be gained."

26 posted comments

Someone should look at all of the contracts awarded to environmental companies...the money trail leads right back to Dunmore. DIRTY, DIRTY, DIRTY. Before the housing authority puts people back in those units on N. Washington Avenue, they might want to do their due diligence on the "companies" doing the abatement and removal services. Hardly any of their people are licensed or trained and they pay for contracts, illegal HAZ disposals, and protection form the law. They are SCUMBAGS, who don't care about anything but MONEY IN THE MATTRESS! DROP THE HAMMER ON THESE THIEVES!!!!!!!

60 MILLION $$$$ IN NO BIDS AT THE SCRANTON SCHOOL DISTRICT..NEVER CHECKED BY ANYONE.....ALSO CHECK ON HARRY MCGRATHS SALARY.....SOLICITOR AND COUNTY DEMOCRATIC CHAIRMAN....HE REALLY RAKES IT IN............

What about all the no bid work the Mayor and his sister gave out the last 8 months, (parking authority & housing authority). No bid in Scranton School District, check out Jeffers and Sunday, any Florida trips with Kalina and Quandel lately.

Report on HAGGERTYS DUI'S AND BAD CHECKS AND HOUSE ARREST. HE IS A CRIMINAL NOT REPORT ON A BUISNESS DOING BAD LIKE KENNY SMITH HE NEVER RECIEVED BAILOUT MONEY AND WAS NOT BORN WITH SILVER SPOON IN HIS MOUTH. HE DOES NOT WANT TO GIVE UP ON HIS FAMILY BUISNESS. KEVIN IS A A-WALL CRIMINAL HIDING IN A DUNMORE BASEMENT AND KENNY IS HARD WORKING BUISNESSMAN HURTING. U RISK MY FAMILYS LIFE DRUNK DRIVING U A WALL LOSER.

Why does the name Highland Associates keep popping up all the time? There are many other engineers in the area but they seem to be associated with all these investigations and public projects. Something smells here.

Shame on us taxpayers believing who we voted in would be better than the other ones.I no longer know who to trust.All I know is Lacka. Co is just like Luzerne Co. Crooked Politicians dressed up in their finest until they trade their suitsfor the orange jumpsuits and lose all their illegally assests to pay for the lawyers & the fines. Does crime pay? Not even whitecollar crime. Eventually the good overcomes the evil!!!!!!!!!

Did you just do an editorial on how the Doherty administration should be allowed to keep a $10K no bid limit. The current city council wanted to lower it. The silence of this paper when it comes to looking into the Doherty administration is absurd at best. TT do your civic duty and end this decades old pay to play system.

Is this a retraction? Just a few weeks ago, the Times printed an editorial PRAISING the use of no-bid contracts, and the raising of the dollar limit on the contracts that can be no-bid. I attempted to post a VERY specific response regarding the abuse of no-bids by a central figure (consulting engineering firm) in the corruption scandal. The Times chose not to post it.

The City of Scranton can and SHOULD adopt an official policy that requires the filing with the City of, for public access,the details of ANY and ALL publicly-funded projects which take place within the city limits. Checks and balances.

It's no wonder the health care center was sold. Mr. Halko ran in down. Thanks Commissioner Munchak. All you Union folk who are upset, you can personally thank Mr. Munchak and of course, Corey and Mike too. I can't even imagine making $15,000 a month!!!! Maybe I could of if I knew Mr. Munchak or in fact, any commissioner. The health care center is lucky not to be owned by these yahoos. It will finally be run the way it should have been.

Tell your friend to go to Delaware and incoporate a new company. Don't worry about experience or expertise. Politician puts thru no bid contracts and awards friend a huge contract with implicit understanding that some money flows back to Politician in such a way that IRS will never know. Politician tells upset taxpayers that he can not open up the books because the vendor and government business needs a certain amount of secrecy in order to operate efficiently, or whatever. When cow is milked dry, have friend shutter corporation, go to Delaware, and set up new corp designed again to screw tax payers and make unqualified friend and politican richer on new no-bid contract. Scoff at dumb tax payers and do same again and again. No need to worry about FBI. They're too busy fighting war on terror.